Rumor: Microsoft interested in purchasing AMD

[Gilrond-i-Virdan]

I hope they'll survive and their x86 and high end GPU business won't be destroyed. We need competition with Intel and Nvidia! Incumbent consoles will cope with such buyout though, they'll simply switch to what many Steam Machines are using (same Intel + Nvidia). The bigger problem is that lack of competition can slow down progress as it usually happens.

 

[CostinRaz]

How do you envision them actually surviving though? Their financial situation isn't going to get any better.

On the CPU side of things there's little they can do to match Intel's market share. On the GPU side they've lost with this generation. The 300 series and Fury X just aren't that impressive really, they just matched Nvidia's efforts after months of Nvidia stomping them into the ground and getting close to 80% market share but that's about it. Their new GPUs won't really help them all that much in reclaiming their lost market share.

Then there's Pascal that comes out next year, which as Nvidia claims will be a quantum leap in terms of performance...whether or not they deliver this time around and make the GPU smaller then 28 nm remains to be seen, but if they do then Nvidia wins.

That's probably why someone buying AMD as quickly as possible and pouring resources into them to release better hardware is the better deal.

 

[GuyNwah]

The catch with buying AMD is they made a toxic deal with Intel to settle the x86 patent problems. They must remain independent to continue to use the x86 architecture in products, and that includes all their CPUs except the ARM that they aren't in production with, probably all their semi-custom designs including the console chips, and up to and including the K12 that's supposed to save them.

You can understand Intel's position in this: they agreed to allow x86 designs to be produced by a smaller competitor, not a competitor backed by Microsoft's or Samsung's deep pockets.

 

[CostinRaz]

You can understand Intel's position in this: they agreed to allow x86 designs to be produced by a smaller competitor, not a competitor backed by Microsoft's or Samsung's deep pockets.

Obviously but they don't want to let AMD go out of business in a few years for obvious reasons, but let's face facts: On the CPU market for us gamers Intel dominates it for medium end and high end rigs. Whatever happens to AMD there won't likely affect us that much on that side, at least us PC gamers

Would be a very interesting situation with the consoles though if MS bought AMD...especially for Sony. This has every making to be a massive clusterfuck.

On the GPU side of things stand quite different. Nvidia is quickly approaching the same level of dominance that Intel has on the CPU side and AMD can't do anything to stop it. The R9 300 series and Fury X barely match the Maxwell series, but while AMD fanboys are cheering for this and others are patting AMD on the back for a so called "good job" it is simply not enough to win back the market share they've lost.

Pascal looms, and when it comes the world will burn. ( Provided of course Nvidia isn't once again selling horseshit ).

 

[HeadClot]

AMD going out of business would be very bad for both the PC Market and the Console Market.

Most consoles aside from the current generation Nintendo WII U are powered by AMD Hardware.

If AMD went out of business or backed out of the CPU or GPU business there would be no competition. Just Intel and Nvidia who could set their prices at what ever they wanted.

Microsoft could set them up as a shell company to keep doing their thing. But then Anti Trust Laws come into play.

 

[GuyNwah]

Antitrust laws aren't the obstacle, not unless Intel were the buyer. The cross-licensing agreement is the obstacle. It's structured heavily in Intel's favor. If AMD gets bought out, they lose the rights to Intel patented technology that they previously licensed. This includes elementary feature sets like SSE, SSE2, and AVX. Intel does not lose rights to any AMD patented technology, not unless Intel gets bought out, and nobody could digest Intel.

Any buyer would have to negotiate a new agreement with Intel, one that Intel does not have to negotiate, in order to avoid seeing 70 percent of AMD's revenue implode as soon as the deal goes through. What's left of the discrete CPU and APU business. The console chips and semi-custom designs using x86 cores. The K12. Gone.

AMD's CFO claims this is not so, but his word carries no ring of truth that I can see. The agreement is public, and others have studied it carefully. If AMD gets acquired and Intel doesn't, AMD and its successor are shut out of nearly $4 billion of revenue (annual, based on 2014).

 

[Gilrond-i-Virdan]

Any buyer would have to negotiate a new agreement with Intel, one that Intel does not have to negotiate

What about the agreement in other direction, with Intel licensing AMD64? If Intel won't negotiate an agreement with the new owner, they'll lose rights on 64 bit processors. I doubt Intel would like that outcome.

 

[GuyNwah]

What about the agreement in other direction, with Intel licensing AMD64? If Intel won't negotiate an agreement with the new owner, they'll lose rights on 64 bit processors. I doubt Intel would like that outcome.

No, the agreement is written in such a way that it appears equal on its face but actually screws AMD.

A party that is acquired loses the right to use IP covered by the agreement. But a party that is not acquired does not lose the right and can continue to use the other party's IP.

Intel would not lose the rights it gained to AMD's IP unless Intel were bought out, and that is just not happening.

"That's some catch, that Catch-22."

 

[Gilrond-i-Virdan]

@GuyNwah: Actual agreement: https://www.sec.gov/Archives/edgar/data/2488/000119312509236705/dex102.htm

Relevant part:

5.2.(c): Termination Upon Change of Control. Subject to the terms of, and as further set forth in, Sections 5.2(d) and 5.2(e), this Agreement shall automatically terminate as a whole upon the consummation of a Change of Control of either Party.

5.2.(d).ii: In the event of any termination of this Agreement pursuant to Section 5.2(c), and subject to the provisions of Section 5.2(e), the rights and licenses granted to both Parties under this Agreement, including without limitation the rights granted under Section 3.8(d), shall terminate as of the effective date of such termination.

This sounds to me like if any of them is acquired - agreement is terminated in both directions. I guess there is some other hidden catch there?

 

[GuyNwah]

The problem with these agreements is it's impossible to take excerpts in isolation. The whole agreement is what is binding, and it also reads:

5.3. Survival. The provisions of Sections 1, 2, 4.5, 5, 6.3, 7 and 9 will
survive any termination or expiration of this Agreement.

The agreement taken as a whole is interpreted by those outside AMD to mean that a breach voids the agreement except for the parts that continue to grant licenses to the non-breaching party, which survive. It is difficult enough to read that it will certainly be disputed by lawyers for some time, but the belief that Intel's rights would survive an AMD buyout or spinoff, and Intel would be under no obligation to renegotiate with the new owner, is not without foundation.

 

[Gilrond-i-Virdan]

This looks like a royal ambiguous mess. Who in their right mind signs such twisted agreements?

 

[zorba1138]

They do participate in open standards... when they already lost the competition battle. WebGL is about browsers, and MS lost the browser wars. Another recent example is their participation in standard container format. Kind of surprising? Not really, MS have no edge in container market where Docker and others are way ahead. So MS show off as "good guys". But in the markets where they have a strong presence? Good luck waiting for their participation! That's why you don't see MS in OpenDocument and Vulkan working groups.

OpenDocument was developed by OASIS which Microsoft co Founded with IBM.

https://www.oasis-open.org/member-roster

Office 2003 & XP were also the 1st commercial office products to adopt the standard in 2006.
OpenDocument is the default format for documents in non-enterprise versions of office, docx is only needed for the collaboration and other advanced features....

And what has docket have to do with anything, it has almost no market share currently a ton of issues, if you need application containers docker is one solution, there were many before it, there are many others now, and there will be many after it....

 

[Gilrond-i-Virdan]

and there will be many after it....

Not from MS. They are non existent in this market.

 

[zorba1138]

Not from MS. They are non existent in this market.

The only thing that doesn't exist is currently the market you are speaking off, it's not even a rounding error in the overall virtualization market as of yet.
Also considering that Hyper-V Containers will replace the standard Azure PAAS offerings it will overshadow Docker's and Rockets market share with a turn of a switch...

But hey NVIDIA badd, MSFT badd, AMD good

 

[Gilrond-i-Virdan]

The only thing that doesn't exist is currently the market you are speaking off, it's not even a rounding error in the overall virtualization market as of yet.

Whether it's rounding or not, it's surely growing enough to have all those participants for standardization.

 

[dragonbird]

This looks like a royal ambiguous mess. Who in their right mind signs such twisted agreements?

Not really, it's pretty clear both in interpretation and intent. Termination "for cause" usually protects the one who didn't cause it (which, in this case, would be Intel). And if, at the time of signing, neither company had any plans or desire to be bought out, neither would have had any real qualms about signing it.

As I mentioned earlier, "termination upon change of ownership" clauses aren't unusual in contracts, because it's something that could have significant impact on the other party. You sign a contract with someone, you don't want to suddenly find the contract is now with someone entirely different.

 

[zorba1138]

Whether it's rounding or not, it's surely growing enough to have all those participants for standardization.

And so far in the big league MSFT and EMC are leading the pack, docker has a good API and a shitty technical solution, EMC (VMware) and MSFT solve the underlying tech issues while keeping it compatible with common middleware products which use the API.

 

[Gilrond-i-Virdan]

And so far in the big league MSFT and EMC are leading the pack

Doesn't look like it (in case of MS), judging by those who actually use containers.

---------- Updated at 10:10 PM ----------

Termination "for cause" usually protects the one who didn't cause it (which, in this case, would be Intel).

So if change of ownership is the cause that makes the agreement survive for those who didn't cause it (i.e. the other party), what is the point of the section that I brought above, which says that change of ownership terminates it for both parties?

 

[dragonbird]

So if change of ownership is the cause that makes the agreement survive for those who didn't cause it (i.e. the other party), what is the point of the section that I brought above, which says that change of ownership terminates it for both parties?

OK. Re-read it in more detail. And I've changed my mind. It is messy. From a second reading, I don't think Intel would still be able to continue to gain benefit from the contract if AMD is taken over and 5.2c kicks in. The one-sidedness only applies to termination due to breach of contract.

The relevant line is:
"In the event of any termination of this Agreement pursuant to Section 5.2(c), and subject to the provisions of Section 5.2(e), the rights and licenses granted to both Parties under this Agreement, including without limitation the rights granted under Section 3.8(d), shall terminate as of the effective date of such termination."

 

[Gilrond-i-Virdan]

The relevant line is:
"In the event of any termination of this Agreement pursuant to Section 5.2(c), and subject to the provisions of Section 5.2(e), the rights and licenses granted to both Parties under this Agreement, including without limitation the rights granted under Section 3.8(d), shall terminate as of the effective date of such termination."

Yes, that's exactly what I was referring to. I understood it that AMD has symmetrical protection in case of it being sold, i.e. Intel will have to renegotiate with the new owner anyway, if they want to continue using AMD64. Apparently GuyNwah understands it as not guaranteed either.